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Misadventures in VC Funding: The $24 Million Moz Almost Raised

randfishkin.com

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Re: Misadventures in VC Funding: The $24 Million Moz Almost Raised

#31

Post by webwright »

vaksel wrote: post #29

frankly I'm surprised they even had to raise funding with their current revenue levels and profit margins. And an investor might think that the company has peaked already. Everyone knows who they are. And SEO is something that doesn't have a lot of growth for company adoption. It's been around so long, that most people already know about it. So your hope for customer acquisition is to find that one marketing professi…

"frankly I'm surprised they even had to raise funding with their current revenue levels and profit margins."

You're probably used to reading about early stage funding, where people NEED to raise money. A lot of growth capital isn't about need. It's about scaling the business... Essentially pumping gasoline thru a working engine faster.

"So your hope for customer acquisition is to find that one marketing professional that doesn't know about SEO."

SEOmoz's business has very little to do with people who don't know about SEO. Have you looked at their tool? What you said is like saying that Google Analytics is for the few marketing professionals who don't know about web traffic.

Re: Misadventures in VC Funding: The $24 Million Moz Almost Raised

#32

Post by suking »

webwright wrote: post #30
suking wrote: post #23

Earlier quoted context omitted.

I think this is it as well. They probably felt the market for SEO SaaS is relatively small and wouldn't get to $100m+ within the next 5-7 years.

$100m in value? With $12m in revenue (double from the previous year!), they are pretty close to being a $100m company NOW.

Revenue - if their post is around $85 they need to get to $500mm+ to be a home run the VCs want. That will require a HUGE amount of revenue, most likely $100+.

Re: Misadventures in VC Funding: The $24 Million Moz Almost Raised

#33

Post by Hisoka »

webwright wrote: post #30
suking wrote: post #23

Earlier quoted context omitted.

I think this is it as well. They probably felt the market for SEO SaaS is relatively small and wouldn't get to $100m+ within the next 5-7 years.

$100m in value? With $12m in revenue (double from the previous year!), they are pretty close to being a $100m company NOW.

it's all based on growth though. They think the chance for growth is slowing down

Re: Misadventures in VC Funding: The $24 Million Moz Almost Raised

#34

Post by josefresco »

earl wrote: post #15
badclient wrote: post #4

So...who's Neil?

This is why we can't have nice things. If Rand wanted the world to know he would have said so. And guess what -- if we were to successfully guess, I'd imagine the next time someone like Rand decides to share fundraising experiences with the world instead of just his close friends, he or someone else in his position will think twice. So please, since I think it's better for everyone instead of just those in entreprene…

I disagree. Rand was as transparent about the process as he possibly could be. Why should the other party be held to a different standard by the community? Would love to see a response by Neil to defend his position.

Re: Misadventures in VC Funding: The $24 Million Moz Almost Raised

#35

Post by imjk »

ericboggs wrote: post #28

Most surprising takeaway from the post: Gillian is Rand's mother. (Mentioned in passing in the deck.)

Thanks. I was wondering who this anonymous other partner was that got to cash out 4X that amount of liquidity that rand would get ($4.75MM v. $1.25MM).

Re: Misadventures in VC Funding: The $24 Million Moz Almost Raised

#37

Post by randfish »

jkahn wrote: post #16

Rand, thank you for the detailed and revealing post. Especially the parts that you didn't need to share that made the story much more concrete - such as revenue and gross margins. I am curious - how do you think the funding would have changed your current trajectory? From all appearances your business is growing well.

Yeah - the growth has been quite good. I think this would have let us work faster and more directly on "next big things" - projects that wouldn't have fast ROI, but might be very exciting from a customer value and technology perspective. We also could have focused a bit less on cost savings with our current data sources and more on raw size/reach/quality.

All that said, I think there's still a great opportunity for us to do 50-60% of the things we wanted, even without funding, albeit more slowly.

Re: Misadventures in VC Funding: The $24 Million Moz Almost Raised

#38

Post by randfish »

suking wrote: post #32
webwright wrote: post #30

Earlier quoted context omitted.

$100m in value? With $12m in revenue (double from the previous year!), they are pretty close to being a $100m company NOW.

Revenue - if their post is around $85 they need to get to $500mm+ to be a home run the VCs want. That will require a HUGE amount of revenue, most likely $100+.

This is a good point. One interesting thing we found with the more growth-focused funds (and the growth-focused parts of traditional VCs) is that at high valuations and high dollar amounts in, they tend to look for 3-5X returns, rather than 10X. This was a big difference from the 2009 raise we attempted, when everyone was asking that question "how do you get us 10X our money?" vs. 2011, when it was "does this have a 95% chance of getting us 3X+ our money?"

Re: Misadventures in VC Funding: The $24 Million Moz Almost Raised

#39

Post by suking »

randfish wrote: post #38
suking wrote: post #32

Earlier quoted context omitted.

Revenue - if their post is around $85 they need to get to $500mm+ to be a home run the VCs want. That will require a HUGE amount of revenue, most likely $100+.

This is a good point. One interesting thing we found with the more growth-focused funds (and the growth-focused parts of traditional VCs) is that at high valuations and high dollar amounts in, they tend to look for 3-5X returns, rather than 10X. This was a big difference from the 2009 raise we attempted, when everyone was asking that question "how do you get us 10X our money?" vs. 2011, when it was "does this have a…

You don't have to name names, but I'd put $ on this being RRE :-).

Re: Misadventures in VC Funding: The $24 Million Moz Almost Raised

#40

Post by rumpelstiltskin »

suking wrote: post #39
randfish wrote: post #38

Earlier quoted context omitted.

This is a good point. One interesting thing we found with the more growth-focused funds (and the growth-focused parts of traditional VCs) is that at high valuations and high dollar amounts in, they tend to look for 3-5X returns, rather than 10X. This was a big difference from the 2009 raise we attempted, when everyone was asking that question "how do you get us 10X our money?" vs. 2011, when it was "does this have a…

You don't have to name names, but I'd put $ on this being RRE :-).

And RRE is an abbreviation of?
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